Gold declined 3 percent over the past month, silver a rather substantial 8 percent and platinum over 3 percent. Many are now calling an end to the bull market of the last 11 years and they have gained some credibility with recent market action. The current cause of weakness is the release of Federal Open Market Committee minutes for March. What was not said in them was an indication of further easing, or QE3.
However, the idea of no QE3 actually creates the fear of higher interest rates down the road. Of course, that will eventually happen. My take is that there is little chance of it before Election Day. If my gut is correct there will be some softening of the somewhat better economic reports we have been hearing lately and therefore some further reaction by the Fed. While many say there has been, or will be no QE3, the Fed did do a monetary dance in the form of a twist where they bought long-term bonds to lower long-term interest rates and therefore lower mortgage rates as well. Over time the Fed will print more dollars. The point is stick with your precious metals assets as insurance, but don’t bet the farm on them.
Bullion is good but coins with high bullion content and nice grades and rarity are much better. In the event that bullion does decline, your coins will maintain their numismatic value. Currently there are many items from several dollars to a few thousand dollars that are great hedges as bullion and yet have real numismatic value. Here are a few examples showing how their prices as percentages over common dates have narrowed in the past five years:
1907-S half G-VG 50 percent to 0-10 percent
1899-S half G-VG 60 percent to 0-5 percent
1900-O half G-VG 55 percent to 20 percent
1893 half G-VG 70 percent to 5 percent
1895 half G-VG 55 percent to 15 percent
1919-S half G-VG 125 percent to 15 percent
1929-D half G-VG 50 percent to 5 percent
1933-S half G-VG 30 percent to 5 percent
There are hundreds of such examples to be found. Look at a 10-year-old Coin Market or Red Book and compare them to a current copy. You will find that you can make up a list, creating a solid investment guide. From where I stand, the less expensive coins have the greatest conservative potential. Of course, if you can afford extreme rarities they nearly always appreciate.